What are the two ways Chop5 Salad Kitchen may handle Cooperative Advertising Fees?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
We may either: (a) collect cooperative advertising fees and remit them to the applicable cooperative; or (b) require you to pay these fees directly to the cooperative. Cooperative advertising fees are uniformly imposed on all Restaurants in the cooperative, including company-owned Restaurants. We may set the minimum cooperative advertising fee, which may be increased by majority vote of all members of the cooperative (but will not exceed the maximum amount specified in the table above). Each member is entitled to 1 vote for each Restaurant that is owned by the member and located in the cooperative. We and our affiliates will be members of the cooperative (and have the same voting rights as franchisees) with respect to company-owned Restaurants located in the cooperative. However, if the majority of Restaurants in the cooperative are company-owned Restaurants, we will not increase the cooperative advertising fee unless a majority of all franchisee members vote in favor of the increase. All cooperative advertising fees you pay are credited towards your Local Advertising Commitment. The maximum total amount we may charge at any given time for the brand fund fee, Local Advertising Commitment and Cooperative Advertising Fee is capped at 8.5% of Gross Sales. There were no advertising cooperatives in effect as of December 31, 2022.
Source: Item 6 — OTHER FEES (FDD pages 12–17)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, the cooperative advertising fees may be handled in one of two ways. Chop5 Salad Kitchen may collect the cooperative advertising fees from franchisees and then remit those fees to the applicable cooperative. Alternatively, Chop5 Salad Kitchen may require franchisees to pay these cooperative advertising fees directly to the cooperative.
These cooperative advertising fees are uniformly imposed on all restaurants within the cooperative, including company-owned restaurants. The amount of the cooperative advertising fee is set by the cooperative itself, but Chop5 Salad Kitchen may set a minimum fee. The cooperative advertising fee cannot exceed the Local Advertising Commitment. Each member of the cooperative gets one vote for each restaurant they own within the cooperative, giving larger franchisees and Chop5 Salad Kitchen itself more influence.
All cooperative advertising fees paid by the franchisee are credited towards their Local Advertising Commitment. The maximum total amount that Chop5 Salad Kitchen may charge for the brand fund fee, Local Advertising Commitment, and Cooperative Advertising Fee is capped at 8.5% of Gross Sales. As of December 31, 2022, there were no advertising cooperatives in effect.